Sales and Leases | 89
c. Substantive Unconscionability Substantive unconscionability generally means that the contractual terms themselves are unfairly or unreasonably one-sided or oppressive. Substantively unconscionable terms tend to allocate contractual risk so unevenly that one reasonably wonders why any reasonable person would knowingly agree to them under the circumstances. These facts, in turn, create an inference that the terms’ purpose is to deprive one party of the substantial benefit of her bargain. Of course, specific contractual terms may be substantively unconscionable, and the contract overall may be substantively unconscionable. Indeed, even if no term in isolation rises to the level of substantive unconscionability, the contract’s cumulative language and context may render it substantively unconscionable. [ See 2 Hawkland UCC Series § 2-302:4, Westlaw (database updated June 2021).] Terms Often Found Substantively Unconscionable Examples of terms commonly (but not always) found substantively unconscionable include inflated prices, inequitable termination or arbitration clauses, unreasonable or unfair limits on consequential damages and other remedies, class-action waivers, and improper warranty disclaimers. Of course, in light of the Federal Arbitration Act’s (FAA) policy to encourage and facilitate arbitration, a defendant will have a hard (though not impossible) time showing an arbitration clause to be unconscionable. [ See Capitol Discount Corp. v. Rivera , No. CV–6114–12/KI, 2013 WL 692940 (N.Y. Civ. Ct. 2013); 2 Hawkland UCC Series § 2-302:4, Westlaw (database updated June 2021).] Price and Unconscionability Courts will virtually never find substantive unconscionability solely on the grounds that the price is unfairly high. The price, however, may contribute to finding substantive unconscionability when considered together with other factors. In particular, the price may be notably higher than the prevailing price in the market or the price the affected party could obtain elsewhere. The greater the disparity between the contract price and the available market prices, the more likely a court will infer procedural unconscionability— i.e. , that the contractual price arose from some unfair or oppressive behavior by the party with superior bargaining power. Additionally, a court may infer substantive unconscionability if, for instance, a consumer debtor seems to be paying top dollar for ultimately shoddy or defective goods. [ See 2 Hawkland UCC Series § 2- 302:4, Westlaw (database updated June 2021); Capitol Discount Corp. v. Rivera , No. CV–6114–12/KI, 2013 WL 692940 (N.Y. Civ. Ct. 2013).]
Made with FlippingBook - Online Brochure Maker